35% of millionaires say they won’t have enough to retire, report finds

Why Americans are making it harder to retire

A cool $1 million is not what it used to be.

According to Credit Suisse Research Institute’s latest Global Wealth Report, there will be nearly 24.5 million millionaires nationwide by 2022 in the US and more millionaires worldwide than ever before. However, having seven figures in the bank offers less security than ever in the face of inflation and wild market swings.

“It’s easy to get that mark, but we may not deliver what we’re hoping for,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.

These days, fewer Americans, including millionaires, feel confident about their finances.

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According to the latest data from Natixis Investment Managers, even among high-net-worth individuals, 58% say they agree that they will have to work longer and 36% agree that retirement may not even be an option.

In fact, a survey of more than 8,500 individual investors found that 35% of millionaires say their ability to be financially secure in retirement is “going to be a miracle.”

Americans now expect to need $1.25 million to retire comfortably, with higher costs impacting household budgets, a separate study from Northwestern Mutual found — a 20% jump from the $1.05 million respondents cited last year.

People are surprised when they do the math and find out that 4% of $1 million is only $40,000 a year.

Good cell Dave

Executive Director of the Natixis Center for Investor Insight

“A million may sound like a lot, but most people are surprised when they do the math and realize that 4% of $1 million is only $40,000 a year,” Goodsell says. “It’s usually a little less than what these people are used to living on.”

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The 4% rule is a popular guideline for retirees to determine how much money they can live on each year without fear of running out.

However, given current market expectations, the 4% rule “may no longer be feasible,” researchers at Morningstar wrote in a recent paper.

Retirement rules ‘outdated’

“A lot of the rules we’re using are outdated,” Goodsell said.

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Meanwhile, the average 401(k) balance is now down 23% from a year ago to $97,200, according to Fidelity Investments, the nation’s largest provider of 401(k) plans.

“Maybe you have that $1 million but you’ve taken a 20% hit on it,” Goodsell said. “On top of that, prices are high.”

Another survey from Bankrate.com found that 55% of Americans feel their retirement savings are lagging behind amid persistently high inflation and market volatility.

“People need to look at how much they have and take the time to do the math to see how long it will last,” Goodsell said. “The name of the game is care.”

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